The upcoming week marks the pre-election period, where heightened election anxiety and a significant earnings schedule are expected to drive high volatility. This trend is likely to continue through election day. Historical analysis shows that the September to November timeframe has often been associated with increased risk, frequently leading to substantial market corrections.
SPY (weekly bars), the MACD, and the extreme stretch between the 13-week and 89-week
moving averages, which historically always leads to extended corrections.
Stocks have demonstrated remarkable resilience, displaying behavior that can be characterized as extreme. The above weekly chart of the SPY highlights this dynamic, tracking the moving average convergence divergence (MACD) alongside the distance between the 13-week and 89-week moving averages. Currently, the MACD indicates an unusually wide gap between these averages, suggesting a potential correction on the horizon.
When such corrections occur, they can be quite severe. Although the market has remained strong, November and December are anticipated to experience downturns due to the current extremes, which could lead to several challenging weeks ahead. Nevertheless, broader analysis suggests that the bull market may extend into 2025 before facing a significant downturn, potentially resulting in years of low or negative returns in the stock market.
SPY (weekly bars), six-month cycles, three-month cycles.
When such corrections occur, they can be quite severe. Although the market has remained strong, November and December are anticipated to experience downturns due to the current extremes, which could lead to several challenging weeks ahead. Nevertheless, broader analysis suggests that the bull market may extend into 2025 before facing a significant downturn, potentially resulting in years of low or negative returns in the stock market.
SPY (daily bars) and 21-trading day cycles with projected ideal troughs around
November 6 (Wed) and December 4 (Wed), with a margin of ±3 trading days.
An examination of the SPY across various timeframes, including weekly and two-hour metrics, reveals a deterioration in the two-hour indicators, often the first sign of an impending correction. Historical examples, such as the market's reaction following the 2016 Trump election, highlight the potential for volatility. On that occasion, the Dow fell nearly 800 points before rebounding. Similar large movements are anticipated in the days leading up to and following this forthcoming election. While signs of a downturn have been expected for weeks, the market continues to set the course, underscoring its ultimate authority.
Reference:
Steve Miller (October 25, 2024) - S&P 500 Cycle Analysis - Time and Price Projections Update (video)
Steve Miller (October 25, 2024) - S&P 500 Cycle Analysis - Time and Price Projections Update (video)
